EXPLANATORY STATEMENT
Issued by the authority of
the Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations
Insurance Act 1973
AMENDED DECLARATION UNDER SUBSECTION 62ZZC(4)
Part VC of the Insurance Act 1973 (the Act) sets out arrangements for assisting policyholders in the event a general insurer fails. In 2009, the Minister made a declaration (Instrument F2010L02502) that Part VC applied in relation to Australian Family Assurance Limited (ABN 78 003 044 862).
As a result, certain persons who have valid claims connected with certain protected policies issued by the declared general insurer are entitled to payments under Part VC regarding those claims, rather than having to prove as a creditor in a winding up of the insurer. Part VC operates to substitute the Australian Prudential Regulation Authority (APRA) for those persons as creditor to the declared general insurer to the extent of those persons' entitlements under Part VC.
At the time the declaration was made, the Minister credited $1,524,030 to the Financial Claims Scheme Special Account, to enable payments to be made to eligible claimants under Part VC. This was on the recommendation of APRA and the judicial manager appointed by the Court.
As more claims have been uncovered, APRA has now advised the Minister that the original allocation is insufficient to meet claims.
After taking the above matters into account the Minister has, under subsection 62ZZC(4) of the Act, made this amendment to the original declaration to increase the amount to be credited to the Financial Claims Scheme Special Account by $200,000.